VLO
Valero Energy Corporation
$309.65
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Strong
·
Conviction
Overvalued
Trading 40.2% above fair value
You pay
$309.65
Bear
$140.96
Fair
$220.90
Bull
$314.56
Bear
$140.96
-54.5%
FCF $4426M × 10x
Fair
$220.90
-28.7%
FCF $5030M × 13x
Bull
$314.56
+1.6%
FCF $5634M × 16x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
19.7x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $277.63 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $220.90 per share.
Warnings
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $277.63 (from 37 analysts). Our estimate is 29% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential